The Sme Growth Strategies Economics Essay

The Sme Growth Strategies Economics EssayThis paper focuses on factors impact the fruit and accomplishment of minor(ip) and medium enterprises. The aim was to identify strategic factors diverseiating materialisation and undestroyable emersion SMEs. The empirical data consisted of 32 puppylike (8 years or less) and 33 persistent (20 years or more) emersion SMEs. A comparison of the dickens groups of harvesting SMEs revealed strategic differences with valuable implications surrounded by green and indestructible SMEs. The results suggest that hearty hop on does issuance for SME outgrowth strategies. The results increase our thought of the factors affecting SME growth and performance in two different contexts.Keywords growth performance strategies infinitesimal and medium enterprises instaurationFirm growth is a central focus atomic amount 18a in strategy, organizational and entrepreneurship question. Much research effort has been targeted particularly at investi gating the factors affecting buckram growth, but to date at that place is no comprehensive hypothesis to inform which unswervings will grow or how they grow (e.g. Garnsey, 1996). It seems that not even precise strong explanatory factors vex been identified, though various explanatory approaches have been presented.The research community largely sh atomic number 18s the glance that growth SMEs have a surplus importance in the economy (see e.g. Storey, 1994). During the last ten years, the research on trustworthy growth has largely focused on high-growth SMEs. It is argued that a relatively polished attribute of any polished plastereds are responsible for the major part of the small pissed contribution to net parvenue employments (Storey, 1994 Birch et al., 1993). These firms have been exposit as gazelles, fliers, growers and winners, and the targeting of effort towards them has been described as picking, stimulating, or backing winners (see e.g. Gibb, 1997 Freel, 1 998 Beaver Jennings, 1995).More recently, the role of fast- developing small firms has been questi aced, and the come on is known as the mice vs. gazelles (Birch et al., 1993) or flyers vs. trundlers (Storey, 1994) debate. In early(a) words, the debate has focused on the question which of these actually has the major impact on net employment (Davidsson Delmar, 1998)? On the some otherwise hand, it has been know that attending exclusively to firm-level growth and jobs may be too narrow an approach. Firms, even very small and non-growing cardinals, do-nothing have different strategic roles or positions in the local economic system (Laukkanen 1999). Some are critical facilitators of other firms growth or of their very emergence, and thus are important for job creation at the local level.In fact, previous research reveals that firm growth is a multidimensional phenomenon. There is substantial heterogeneity in a number of factors associated with firm growth and related research (Delmar et al., 2003). The just about recent research on firm growth has increased our understanding of different growth patterns. As Delmar et al. (2003) have shown, firm growth patterns are related to the demographic characteristics of firms such as firm eld.SME growth is often closely associated with firm boilersuit success and survival (e.g. Johannisson, 1993 Phillips Kirchhoff, 1989). Growth has been used as a simple measure of success in agate line (e.g. Storey, 1994). Also, as Brush and Vanderwerf (1992) suggest, growth is the about appropriate indicator of the performance for surviving small firms. Moreover, growth is an important precondition for the achievement of other financial oddments of business (de Geus, 1997 53 Storey, 1994 Reynolds, 1993 Day, 1992 128 Phillips Kirchhoff, 1989). From the point of view of an SME, growth is usually a critical precondition for its longevity (Storey, 1994 158). Phillips and Kirchhoff (1989) pitch that youthful firms that grow have twice the probability of survival as young non-growing firms. It has been also found that strong growth may reduce the firms profitability temporarily, but increase it in the long run (McDougall et al., 1994 cf. MacMillan Day, 1987).However, in that location are several conceptual and empirical challenges in the study of firm growth (see e.g. Davidsson Wiklund, 2000 Delmar, 1997). Firm growth in general refers to increase in size. In research, firm growth has been operationalized in many ways and different measures have been used. This may be one reason for the contradictory results reported by previous studies (Weinzimmer et al., 1998 235), though other explanations have also been presented (see Delmar et al., 2003 see also Davidsson Wiklund, 2000).The most frequently used measure for growth has been change in the firms turnover (e.g. Weinzimmer et al., 1998 238 Hubbard Bromiley, 1995 Hoy et al., 1992 Venkatraman Ramanujam, 1986). some other typical measure for growth h as been change in the number of employees. However, it has been found that these measures, which are frequently used in the SME context, are strongly intercorrelated (North Smallbone, 1993 Storey et al., 1987). such an intercorrelation may not exist among capital-intensive large companies.Most studies of firm growth have focused on large companies or new profess, while the growth of established, long-lived SMEs seems to have attracted much less attention. In fact, many organizational life cycle models present growth as one stage of phylogeny in the organizational life cycle. On the other hand, it has been shown that most new jobs are created by existing, not new, SMEs (e.g. Davidsson et al., 1993 see also North et al., 1992). However, previous studies of SME performance have focused on the performance of new ventures kind of than on existing SMEs and on the factors behind their longevity and growth (e.g. Tsai et al., 1991 Duchesneau Gartner, 1990 Keeley Roure, 1990).This stud y takes a holistic and extensive approach to factors affecting SME growth and performance. Firm growth and performance are much affected by strategy, which involves choices along a number of dimensions and gutter be represented by a firms overall collection of individual business-related decisions and actions (Mintzberg, 1978 Miles Snow, 1978). Though there is a variety of definitions of the term of strategy, it can immaculately be conceptualized as a pattern of strategic variable stars, because the elements of strategy the individual business-related decisions and actions are interdependent and interactive (Galbraith Schendel, 1983). It is argued that the identification of strategy patterns permits a more complete and accurate depiction of overall strategic behavior (see e.g. Hambrick, 1983 Robinson Pearce, 1988).Previous research has suggested that the paths to growth can differ systematically by firm-level factors such as firm age (Fisher and Reuber, 2003 Delmar Davidsson , 1998). In fact, already in the late fifties Penrose (1959) presented the view that a firms growth pattern is dependent on its age, size, and industry affiliation (see Delmar et al., 2003 also Stinchcombe, 1965). As Delmar et al. (2003) suggest, it is probable that different growth patterns have different implications for management and possibly also for the long-term performance of the firm.In this light it seems useful to compare young growth SMEs and long-lived growth SMEs and determine whether they differ in characteristics and strategies. The central research question is, how do young and long-lived growth SMEs differ in their strategic attributes? In other words, the aim of this paper is to investigate whether firm age plays a role in firm characteristics and strategies. The findings will increase our understanding of the factors associated with firm growth and performance in these two different contexts.FACTORS AFFECTING SME GROWTHAlthough there has been much interest in und erstanding small firm growth during the last ten years (e.g. Davidsson Delmar, 1999 Delmar, 1997 Wiklund, 1998), there is still not much of a common body of well-founded knowledge about the causes, make or processes of growth (Davidsson Wiklund, 2000). Moreover, although several determinants of firm growth have been suggested, researchers have been unable to achieve a consensus regarding the factors leading to firm growth (Weinzimmer, 2000). Most of the research work in this area fails to provide convincing evidence of the determinants of small firm growth as a basis for informing policy makers (Gibb Davies, 1990 26). Attempts to condition models for predicting the future growth of the firm, i.e. picking winners, have not been particularly successful. Moreover, as Spilling (2001) reminds us, the status of be a growth firm may be rather temporary.Early studies of growth focused on large companies and their diversification strategies. However, small firms are not small big firms . In large companies the role of diversification, for example, may be significantly bigger than in the case of SMEs. Indeed, growth through diversification may be necessary for the growth of a large play along (Kay, 1997).The existing research on the growth and strategy of SMEs has focused mainly on new ventures (Olson Bokor, 1995). There are few studies of the growth of established SMEs one instance is Davidsson (1989), who studied the subsequent growth of an SME from the psychological point of view. Maybe the most comprehensive compilation of results of previous studies focusing on small firm growth is that presented by Storey (1994).Several classifications of factors affecting firm growth have been presented. The general preconditions for growth have been suggested to be (1) entrepreneurs growth orientation (2) up to(predicate) firm resources for growth and (3) the existence of the market place opportunity for growth (cf. Davidsson, 1991).Storey (1994 158) claims that there a re trey key influences on the growth rate of a small independent firm (1) the background and access to resources of the entrepreneur(s) (2) the firm itself and (3) the strategic decisions taken by the firm once it is trading. The most important factors associated with an entrepreneur are motivation, education, the firm having more than a single owner, and the firm having middle-aged business owners. The growth of the smallest and youngest firms is the most rapid. The location and industry sector also affect the growth. The most important strategic factors are shared ownership, an ability to identify market niches and introduce new products, and an ability to build an efficient management team. Storey argues that these third components need to be combined appropriately for growth to be achieved.Gibb and Davies (1990 16-17), on the other hand, have grouped the factors explaining growth into four types of approach (Gibb, 1997 2-3 Pistrui et al., 1997 Poutziouris et al., 1999). These are (1) personality-dominated approaches, which look for the impact of personality and capability on growth, including the entrepreneurs personal goals and strategic business aspirations (e.g. Chell Haworth, 1991 1992) (2) firm ontogeny approaches, which seek to characterize the growth pattern of the firm crossways stages of development and the influence of factors affecting growth process (e.g. Scott Bruce, 1987) (3) business management approaches, which pay attention to the importance of business skills and the role of functional management, planning, control and imposing strategic orientation in terms of shaping the growth and performance of the firm in the marketplace (e.g. Bamberger, 1989 1983) and (4) sectoral and broader market-led approaches which focus largely on the identification of growth constraints and opportunities relating to small firm growth in the context of regional development or the development of specific industrial sectors such as high-technology small firms (e.g. Smallbone et al., 1993).The entrepreneur and growth intentionThe behavior of entrepreneurs is strongly affected by intentions (e.g. Krueger Carsrud, 1993 315 Bird, 1988 442). The firms strategic behavior and subsequent growth is understandable in the light of its growth intention. Therefore, firm growth is based not merely on chance, but on the managements conscious decision making and choice. Naturally, the firm can grow even though it is not the managements aim, but in such a case the growth is not planned and so may allow in more risks. Planning helps in managing growth.In general, goals and objectives can be divided into two categories. On the one hand, there are final goals which are valuable as such. On the other hand, there are goals which have instrumental value for achieving some other goals. Growth can be regarded as the second most important goal of a firm, the most important one being firm survival, i.e. the continuity of the business. Moreover, growth is a n important precondition for a firms longevity. Negative growth of an SME is often a sign of problems, while stagnation, i.e. a situation where growth has stopped, is usually indicative of problems that a firm will face in the future.As a matter of fact, growth often has instrumental value. For new ventures, firm growth is needed to ensure an adequate production volume for profitable business. Growth can function as an instrument for increasing profitability by enlargening the firms market-share. Other similar goals include securing the continuity of business in the conditions of growing demand or achieving economies of scale. Moreover, growth may bring the firm new business opportunities (cf. the corridor principle, Timmons 1999), and a larger size enhances its credibility in the market. Also, achieving a higher net value of the firm can be regarded as a motive for firm growth.In SMEs, growth objectives are often bound up with the owner-managers personal goals (e.g. Jennings Beav er, 1997), and so it is important that they support all(prenominal) other. Much has been written about the importance of the entrepreneurs growth motivation (e.g. Perren, 2000 Davidsson, 1991 Miner, 1990). The close connection between an owner-manager and the firm is the dominant characteristic of small firms (Vesalainen, 1995 18). Instead of profit maximization or growth, a firms primary goal may be the entrepreneurs independence or self-realization (see e.g. Foley Green, 1989). Moreover, there may be no adequate resources for growth, or the expected increase in business risks may limit a firms growth willingness. However, aversion to growth has been said to be the principal reason why most SMEs stagnate and decline (Clark et al., 2001).In several typologies, entrepreneurs and firms are categorized by their business goals, so growth has been a widely used dimension in many typologies. There are two broad approaches in the studies of small firm success (1) the business professiona ls model, and (2) the small business proprietors model (Bridge et al., 1998 140-142). These two approaches can be identified in several typologies of entrepreneurs (e.g. Smith, 1967 Stanworth Curran, 1976). According to the business professionals model, a successful firm is one that achieves its highest potential in terms of growth, market share, productivity, profitability, return on capital invested or other measures of the performance of the firm itself. In the small business proprietors model, the owner-managers main busy is whether the firm is providing them with the benefits they want from it. These benefits are often associated with a lifestyle and an income level to maintain it. In the latter model, firm success therefore means being able to reach a level of comfort rather than achieving the businesss maximum potential.Firm developmentIn firm development approaches, firms are seen as impermanent phenomena which are born, grow, mature, decline and die. Firm growth is the basic dimension of the models of organizational life cycles (e.g. Greiner, 1972 1998 Mintzberg, 1979 Churchill Lewis, 1983 1991 Miller Friesen, 1983b Scott Bruce, 1987). Numerous models of organizational life cycles have been presented, e.g. a three stage model (Smith et al., 1985), four stage models (Quinn Cameron, 1983 Kazanjian, 1988), five stage models (Greiner, 1972 Galbraith, 1982 Churchill Lewis, 1983 Scott Bruce, 1987), and a seven stage model (Flamholtz, 1986). These multistage models use a diverse array of characteristics to explain organizational growth and development. organisational life cycle models is one application of the configurational approach in describing the stages of life cycles and the transformation from one stage to another(prenominal) (Mintzberg et al., 1998).Common to these growth pattern models is the claim that changes in an organization follow a pattern characterized by discrete stages of development ( move et al., 1994). Typical of these patte rns are the place of events that show how things change over time, a hierarchical progression that is not easily reversed, and a composite of a broad range of organizational activities and structures. Organizational life cycle models are important in understanding the differences in success factors of the firm between the stages of the life cycle.However, organizational life cycle models have been criticized because of their extreme simplification of reality in some cases not all stages of development are found, some stages of development may occur several times, the stages of development may occur in an irregular order, and there is a lack of empirical evidence to support the theories (e.g. Gibb Davies, 1990 Bridge et al., 1998 105 Eggers et al., 1994 Birley Westhead, 1990 Miller Friesen, 1983a Vinnell Hamilton, 1999 cf. Dodge et al., 1994). In addition, on the basis of the results of their study of high-growth firms, Willard et al. (1992) concluded that the applicability of c onventional wisdom regarding the leadership crisis in rapid growth entrepreneurial firms may no longer be valid, if, in fact, it ever was.Despite the critiques of organizational life cycle models, strategic management and entrepreneurship research has demonstrated life cycle theory to be one of the most powerful tools for understanding and predicting venture performance. According to Greiner (1972 1998), for example, a firms failure to adapt to a series of crises caused by growth is one of the principal causes of firm failure.Growth strategiesSeveral growth strategies related to business management approaches have been presented in the literature. Managing growth is a major strategic issue for a growing firm (see e.g. Arbaugh Camp, 2000). Strategy is the most important determinant of firm growth (Weinzimmer, 2000). Among high-growth firms, Dsouza (1990) identified three primary strategic clusters (1) build strategy, i.e. stress on vertical integration (2) expand strategy, i.e. emp hasis on resource allocation and product differentiation and (3) maintain strategy, i.e. emphasis on market dominance and/or efficiency. Thompson (2001 563-565) presents four growth strategies (1) organic growth (2) acquisition (3) strategic alliance and (4) joint venture.On the other hand, when looking at the product/market strategy, four options can be seen (1) market penetration (2) new product development (3) new market development and (4) moving into new markets with new products (Burns, 1989 47). However, there is a lack of agreement in empirical findings concerning product- and market-based strategies. While Sandberg and Hofer (1987) argue that product-based strategies work better than focused strategies, Cooper (1993) claim that focused strategies outperform distinguish product strategies (Pistrui et al., 1997). Perry (1986/87) investigated growth strategies for an established small firm, and concluded that the most appropriate growth strategies are niche strategies, i.e. ma rket development and product development strategies, in that order. However, it seems that most empirical studies focus on new venture strategies. Studies of competitive strategies related to firm growth have been carried out in the new venture context by McDougall and Robinson (1990), McDougall et al. (1992), Carter et al. (1994), and Ostgaard and Birley (1995), among others.As opposed to the organic growth strategy, acquisitions are regarded rather as a large company growth strategy which can be either synergistic or nonsynergistic (Anslinger Copeland, 1996). Forward or backward vertical integration means that the acquired firm is located at a different level of the value-addition chain, i.e. the acquired firm is a customer or supplier of the firm. In contrast, horizontal integration refers to a firm which is at the same level of value-addition, i.e. it is a competitor. Lateral integrations refer to unrelated businesses which represent a diversification strategy.In addition to be coming bigger and thus acquiring greater market power, there might be several other reasons for acquisitions, e.g. acquiring synergies, industry restructuring, reduction of business risk, acquiring new knowledge and other necessary resources, overcoming barriers to entry, and entering new markets quickly (see Vermeulen Barkema, 2001 Empson, 2000 Birkinshaw, 1999 Tetenbaum, 1999 Chatterjee, 1992). Despite the fact that growth through acquisitions is more typical of larger firms than smaller ones (see e.g. Davidsson Delmar, 1998), it is one option for the growth of an SME. However, it seems that few studies focus on acquisitions made by small firms.Also, one often neglected way of growing is by setting up new firms. Studies using a firm as the unit of analysis have not been able to identify growth through a portfolio of firms as one way of growing (see Scott Rosa, 1996). However, it has been found that portfolio entrepreneurship appears to be more common than suspected, and that it is characteristic of entrepreneurs who own and manage growth firms (Pasanen, 2003b). Wiklund (1998 239) concluded that growth through portfolios of firms does not seem to be an alternative to growing a single firm, but entrepreneurs leading rapidly growing firms tend more often to start subsidiaries and independent new firms and to grow these firms. Small business growth through geographic expansion is a challenging growth strategy, as during the course of opening a new geographical site an entrepreneur will be confronted with the task of managing an existing business and a start-up at the same time (Barringer Greening, 1998).Penrose (1959) proposed already in the late fifties that firm growth is constrained by the availability and quality of managerial resources. Many studies draw attention to the important role of an entrepreneurial team for firm growth (see Birley Stockley, 2000). Also, in their study of technology-based ventures, Eisenhardt and Schoonhoven (1990) found an ass ociation between a strong management team and firm growth (see also Weinzimmer, 1997). In addition to the importance of comfortable firm-internal conditions, the strategies should be in harmony with the environmental conditions. Different growth environments may require different business strategies for SMEs. For instance, Chaganti (1987) found that for small manufacturing firms, different growth environments compulsory distinctly different strategies. Interestingly, this was contrary to the findings concerning large companies. It was concluded that strategic flexibility is a critical requirement for small firms (Chaganti, 1987).Growth barriersSectoral and broader market-led approaches focus largely on the identification of growth constraints and opportunities. It has been found, for instance, that economic fluctuations strongly affect the growth probability of small firms (Kangasharju, 2000). Also, for firm growth, it seems that aiming at growing market niches is more important t han fetching market shares from competitors (Wiklund, 1998). However, growth can happen only if there are no growth barriers. Such barriers can be related to firm-internal and firm-external factors (see e.g. Barber et al., 1989 Smallbone North, 1993a Vaessen Keeble, 1995 Jones-Evans, 1996 Vesper, 1990 174-175 convert Kamshad, 1994).The growth barriers characteristic of small firms in peripheral locations have been presented by Birley and Westhead (1990 538). In the study carried out by the Cambridge Small Business Research affectionateness (1992), the most common growth barriers were related to factors on the macro level. The most important growth barriers were related to difficulties in obtaining finance and the price of money, the level of and return in demand (also Perren, 2000), and tightening competition (also Hay Kamshad, 1994). Other growth barriers were caused by restrictions determined by authorities, problems in obtaining a skilled workforce, and the small number o r lack of potential cooperation partners in the area. The firm-internal factors affecting unwillingness to grow include the entrepreneurs fear of losing her or his autonomy, difficulties in fitting together personal and the firms goals, and wishy-washy managerial or marketing skills (see also MacNabb, 1995 Perren, 2000). These issues are particularly typical when an entrepreneur transfers from the role of entrepreneur to that of manager, or when the firm hires a new manager. entropy AND METHODSThis paper is based on data from a larger exploratory study of the factors affecting SME performance (Pasanen, 2003a). Empirical data were collected from 111 growing SMEs in Eastern Finland. The sample was split into quartiles, based on firm age. Lower and upper quartiles of firms were chosen for the final samples, in order to compare the firms in these quartiles with each other. The lower quartile consisted of 32 SMEs aged eight years or less (young firms), whereas the upper quartile consist ed of 33 SMEs aged twenty years or more (long-lived firms). A growth firm was defined as a firm with actual growth in turnover during the past five years. Growth was measured as a change in turnover between two time points ignoring the regularity or irregularity of growth over time (see Delmar et al., 2003 Weinzimmer et al., 1998 Delmar, 1997). A armor questionnaire was directed to the CEOs of SMEs operating in the sectors of manufacturing, business services, and tourism. The response rate was 53.7 %.Firms in the samples shared the following features (1) size SMEs, i.e. they employed fewer than 250 persons (2) performance growth firms, i.e. they had freehanded in terms of turnover during past years (3) location peripheral, i.e. outside major cities and not in core areas (4) ownership independent firms, not subsidiaries of other companies and (5) industry sector operated in the sectors of manufacturing, business services, and tourism. The age of young firms ranged from 2 to 8 years , the average being 5.5 years with standard deviation of 1.7 years. The age of long-lived firms ranged from 20 to 120 years, the average being 40.4 years with standard deviation of 24.9 years. Half of the long-lived firms were less than 35 years old.A comparison of the two groups of SMEs was based on data referring to the characteristics of entrepreneurs and enterprises, their life cycles, the strategic choices made, the success factors of SMEs, and the nature of their environment (see Pasanen, 2003a). Several factors in these areas are associated with firm performance. The characteristics of entrepreneurs consist of variables relating to entrepreneurs education, scram and other demographic factors. Variables related to the characteristics of SMEs and their life cycles include the firms demographic characteristics and growth behavior indicators. For the strategic choices made by the firm, the focus was on innovativeness, internationalization, specialization and networking. These st rategic choices include three important elements affecting SME performance markets, products, and the way of doing business (Normann, 1976). Innovativeness refers to the products of the firm, internationalization to its markets, and specialization and networking to the way of doing business. The environment was approached by studying the characteristics of the customer, industry and location. The success factors of SMEs were presented as statements describing their importance in the firms competitive advantage.In identifying the differences between young and long-lived SMEs, approximately 150 variables were tested using appropriate statistical tests, depending on the variable the t test, non-parametric Mann-Whitney U test, or chi-square test. These tests were conducted to test the differences between the two groups for each of the individual variables. In some analyses, the U test was used instead of the t test due to the skewness of the data.RESULTSA number of differences in charac teristics of the owner-managers and firms and their success factors were found between young and long-lived growth SMEs. Three variables related to the characteristics of the owner-managers showed statistically significant differences between the two groups of SMEs (Table 1). Almost all young firms were led by the founder(s) of the firm, whereas this was the case for only half of the long-lived SMEs. Among young SMEs, owner-managers had less experience and were younger than their counterparts in long-lived SMEs.TABLE 1 Differences in characteristics of owner-managers between young and long-lived SMEs (pVariablesTestp valueFounder2 = 6.705 (df = 1)p = .010Total length of experience as owner-managerU test (z = -2.546)p = .011AgeU test (z = -2.459)p = .014Fourteen variables characterizing the SMEs showed statistically significant differences between young and long-lived SMEs (Table 2). Young firms had had more founders (means 3.3 vs. 2.1) and had more founders still involved in the fir m at the time of the survey than long-lived SMEs had (means 2.9 vs. 1.1). Almost all young firms were founded by a team of owners, whereas half of the long-lived SMEs were founded by a single owner. Being a family firm was more typical of long-lived SMEs (58%) than of young firms (19%).Long-lived SMEs were bigger in size than their younger counterparts the average full-time personnel was 84 employees in long-lived SMEs and 21 in young firms. Moreover, the number of establishments was bigger in long-lived SMEs than in young firms, averaging 3.5 and 1.7, respectively. Acquisitions or mergers were more typical of long-lived SMEs (39%) than of young SMEs (13%).Owner-managers in long-lived SMEs were more well-provided with their firms success than those in young firms. On a scale of 1 (fully satisfied) to 4 (not at all satisfied), owner-managers in the long-lived SMEs had an average satisfaction of 1.7, whereas among young firms the average was 2.1. During their life cycle, more than ha lf of the long-lived SMEs (55%) had at least once faced a situation where the firms existence, i.e. survival, had been threatened, while only one twenty percent of the young SMEs (22%) reported that their existence had been threatened.Managerial know-how was considered to be higher in long-lived SMEs than in young firms. In long-lived SMEs, principles and practices of management had changed more than in young firms. Among young SMEs, almost all firms (91%) had stayed close to their original business, whereas among long-lived SMEs seven out of ten firms (70%) had stayed close to their original business.There were also differences in products and customer structures between young and long-lived SMEs. The proportion of products with declining volume was higher in long-lived SMEs (6% of their products), whereas such products accounted for 2% of the young firms products. Among young firms, the cumulative proportion of turnover due to the five biggest customers was 59% of the firms total turnover, whereas in long-lived SMEs it was clearly lower, 41%.TABLE 2 Differences in characteristics of firms between young